The auto repair shop of Empire Motor Sales uses standards to control labor time and labor cost in the shop. The standard time for a motor tune-up is 2.5 hours. The record showing time spent in the shop last week on tune-ups has been misplaced; however, the shop supervisor recalls that 50 tune-ups were completed during the week and the controller recalls that the labor rate variance on tune-ups was $87, favorable. The shop has a set standard labor rate of $9 per hour for tune-up work. The total labor variance for the week on tune-up work was $93, unfavorable. The number of actual hours spent on tune-up work last week was: Group of answer choices 145 hours 140 hours 125 hours 105 hours
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
The auto repair shop of Empire Motor Sales uses standards to control labor time and labor cost in the shop. The standard time for a motor tune-up is 2.5 hours. The record showing time spent in the shop last week on tune-ups has been misplaced; however, the shop supervisor recalls that 50 tune-ups were completed during the week and the controller recalls that the labor rate variance on tune-ups was $87, favorable. The shop has a set standard labor rate of $9 per hour for tune-up work. The total labor variance for the week on tune-up work was $93, unfavorable.
The number of actual hours spent on tune-up work last week was:
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